Definition:

Change in Other Debt refers to the variation in the amount of debt that a company has, which is not classified under primary categories like long-term debt or short-term debt. This can include various forms of liabilities such as notes payable, lease obligations, or other financial obligations that do not fall under traditional debt categories.

Examples

Examples of Other Debt can include a company's obligations from a line of credit, promissory notes, or any other non-standard borrowing arrangements. For instance, if a company takes a loan from a related party or has a vendor financing agreement, these could be classified under Other Debt.

Formula:

Change in Other Debt = Other Debt at End of Period - Other Debt at Beginning of Period

How to use the metric:

This metric is used to assess the changes in a company's financial obligations that are not captured under standard debt categories. It helps in understanding the company's additional borrowing activities and can be a signal of liquidity management or financial strategy.

Limitations:

One limitation of this metric is that it may not provide a complete picture of a company's financial health, as it only focuses on non-standard debt. It can also be affected by accounting practices and may not be comparable across different companies or industries due to variations in what is classified as Other Debt.

Applies to:

This metric can be useful in industries with complex financing arrangements, such as real estate, construction, or technology, where companies might engage in various forms of non-traditional borrowing.

Doesn't apply to:

Industries with straightforward debt structures, such as utilities or consumer staples, may not find this metric as relevant because they typically rely on more traditional forms of debt financing.

Summary:

Change in Other Debt is a financial metric that tracks the variation in a company's non-standard debt obligations over a period. While it provides insights into additional borrowing activities, it has limitations in terms of comparability and completeness. It is particularly useful in industries with complex financing needs but may be less relevant in sectors with straightforward debt structures.